August 2008 Special Report on Vietnam's Economic Bubble

Inflation remains high in August 2008 but so does Vietnamese consumer confidence. Do they know something we do not, or are they being blinded by false hopes and speculation?

Workers go on strike in inflation-hit Vietnam http://www.dawn.com/2008/08/03/ebr13.htm

HANOI, Aug 2: Thousands of workers have gone on strike in Vietnam, demanding higher wages to match the rising cost of living after inflation surged 27 per cent year-on-year in July, media reported on Saturday.

Nearly 5,000 laborers downed tools from Friday at the Kingmaker footwear plant in the Vietnam-Singapore industrial zone in southern Binh Duong province near Ho Chi Minh City, reported the Lao Dong (Labor) newspaper.

The workers at the Hong Kong-invested plant demanded a raise in salaries, which were now about one million dong ($60) per month, and an improvement in the quality of their canteen lunches, the newspaper reported.

More than 1,000 workers have also been on strike since Thursday at a South Korean factory in Long An province, said the Thanh Nien daily.

Workers have been hit hard by double-digit inflation, worsened by a recent 31 per cent petrol price hike which has driven up costs of other goods and services.

Taxi fares rose 15 to 25 per cent in Ho Chi Minh City last week.

Fishermen in many provinces have been badly affected by rising fuel prices and some have kept their boats docked in harbor rather than voyage out to sea.

Prime Minister Nguyen Tan Dung has instructed the finance and agriculture ministries to provide temporary aid of more than $70 million to support fishermen in 27 coastal provinces, media reports said.

Hoang Ngoc Thanh, vice chairman of the Vietnam Labor Federation, said workers’ salaries are too low and many face difficulties meeting costs for rent and healthcare, reported the Tien Phong daily.

The federation will this month submit a proposal to the powerful politburo to raise the national minimum wage, Thanh was quoted as saying.

Vietnam on January 1 raised the minimum wage to 540,000 dong for state employees, to 620,000 dong for workers in state-owned companies, and to between 710,000 and one million dong for workers in foreign-invested enterprises.—AFP

In Vietnam, Consumer Confidence High — Inflation Too
http://blog.nielsen.com/nielsenwire/consumer/vietnam-consumer-confidence-high-despite-inflation/

Vietnam is experiencing its highest inflation in more than a decade, but consumer confidence in the country is still relatively high, according to Nielsen.

The Vietnam News Agency Bulletin reported Wednesday that the country ranked ninth in Nielsen’s recent survey of global consumer confidence.

The same study showed that Vietnam’s inflation rate climbed to 26.8% in June — compared with a rate of 8.3% a year ago.

“Although inflationary pressure will directly impact consumer behavior within some product and service categories, mid-to long-term prospects in Vietnam are still very encouraging,” Aaron Cross, Managing Director of Nielsen Vietnam, told the Agency Bulletin. “Most of our clients in Vietnam continue to enjoy very strong growth and are increasing their investments based on strong consumer demand.”

HCMC Real Property costs increase in August
http://www.thanhniennews.com/business/?catid=2&newsid=41214

The prices of apartments and land on District 2’s main roads rose by VND1 million to VND2.5 million (US$60-$150) per square meter.

Land on Tran Nao and Luong Dinh Cua streets, for example, are now priced VND60 million to VND80 million ($3,600-$4,800) per square meter.

Flats in Van Do Building now cost more than VND20 million ($1,200) per square meter while apartments in the H3 Building on Hoang Dieu Street sold at VND28 million to VND30 million ($1,680-$1,800) per square meter.

As these apartment buildings are located near the city center, sellers decided to raise the prices, some real estate centers said.

The backer of the Phu My Building project in District 7 is advertising apartments at VND19 million to VND21 million ($1,140-$1,260) per square meter, a sharp rise compared to last month’s price of VND15 million to VND16 million ($902-$962) per square meter.

Experts said the demand for real estate was still high but customers were being very careful, searching for a quality apartment at a good price.

Many customers are also waiting to buy real estate from investors who need money to clear bank loans, experts said.